The success of objectives-based programs depends to a considerable extent on how effectively students and teachers assess mastery of objectives and make decisions for future instruction. While educators disagree on the usefulness of criterion-referenced tests the position taken in this monograph is that criterion-referenced tests are useful, and that their usefulness will be enhanced by developing testing methods and decision procedures specifically designed for their use within the context of objectives-based programs. This monograph serves as a review and an integration of existing literature relating to the theory and practice of criterion-referenced testing with an emphasis on psychometric and statistical matters, and provides a foundation on which to design further research studies. Specifically, the material is organized around the following topics: Definitions of criterion-referenced tests and measurements, test development and validation, statistical issues in criterion-referenced measurement, selected psychometric issues, tailored testing research, description of a typical objectives-based program, and suggestions for further research. The two types of criterion-referenced tests focused on are: Estimation of "mastery scores" or "domain scores", and the allocation of individuals to "mastery states" on the objectives in a program. (Author/BJG)